Regular Softwood Briefing from TTJ: June

5 June 2018

The UK softwood market spluttered through May. Intermittent demand combined with late shipping arrivals compounded the effect on importers trying to move volume, but sharply increased selling prices compensated for any downturn in cubic metres invoiced.

Erratic log supplies within the Baltic States kept mills on the back foot, with some unexpectedly receiving high concentrations of logs in diameters and lengths instead of the sizes ordered leaving them unable to fully produce the specifications buyers have been waiting for.

In terms of price trends, enough information about the strength of global markets has circulated among importers to engender a resignation towards the pace of international pricing levels, but some remain both cautious and sceptical that the UK might not keep pace.

From the perspective of producers in northern Europe, mills are selling comfortably and there is little if any unsold capacity - strength-graded whitewood in particular is selling out quickly.

While sawmills are busy and in need of log supplies, fibre producers in Belarus, Karelia and the Ukraine are experiencing unprecedented interest for softwood in either logs or first transformation sawn wood.

In Sweden, domestic demand along with active markets in Denmark and Holland have driven up returns, and now the US market is becoming overwhelmingly more attractive as prices are breaking historical highs, driven by demand in excess of supply.

In fact, due to the strength of the lumber market in North America the CME (Chicago Mercantile Exchange) futures market has reviewed its daily limit from US$10 to US$15.

On the currency market, Sterling appears to have recently settled within less volatile parameters against the Euro, Swedish Kronor and US dollar which is providing some stability for UK traders.

A stable situation reduces the fear of writing down landed stock against a stronger pound with cheaper forward arrivals, or a sudden increase in price if Sterling collapses.

At the quayside, stockists are currently finding gaps appearing in their inventories. Many importers have bought well into the third quarter in preparation for anticipation of shortages from the summer holiday when the mills are closed.

Few distributors want to take the chance of running stocks too low, as production might not be fast enough to meet demand when shippers return to work.

Swedish shippers are seeing increasing softwood prices in the US